Before You File, Consider These Tax Deductions
No matter the month or time of year, it’s never too early to start thinking about tax season, and that’s especially true for business owners. Being proactive when it comes to taxes and tax deductions goes a long way in preventing a mental and financial meltdown. While you’re getting ready for the next Tax Day deadline, see if you and your business qualify for these deductions.
Paper, paper clips, business postage, mouse pads and pens are just some of the office supplies you can deduct from your taxes. To make the most of this deduction, make sure you hold onto and keep track of your receipts throughout the year.
Self-employed individuals who have an office set up at home can get a tax deduction from the IRS. One catch with this particular deduction is that the room has to be devoted to your business and nothing else. If you only use the room as an office during morning hours and as a den during the second half of the day, it’s not considered a tax deduction. What’s great about this deduction is that it covers situations where only part of a room is used solely as a home office. Measure your workspace and divide it by the total square footage of your home to calculate your total home-related business expenses.
Furniture and Equipment
All furniture and equipment used during the course of business are additional tax deductions you can claim. There are two options for this particular deduction: you can either deduct the full cost of your office equipment and furniture the tax year you bought it, or you can spread out the deduction over the course of seven tax years. Should you choose the section option, know that you won’t be able to equally divide the total cost of your furniture and equipment. Instead, you’ll have to make different calculations each year according to a special IRS chart. You’ll likely be better off consulting a tax expert to determine which option is best for you.
Do you have to drive for your business? Entrepreneurs who do can keep some of their money with the help of the IRS. Just like with deducting office equipment and furniture, you also have two options for deducting mileage. You can add up all your miles for the year along with the cost of parking and tolls; or you can subtract the business portion of your total yearly costs for gas, insurance, maintenance and repairs.
Tax deductions can change and vary from year to year, so always make sure you consult an experienced tax accountant who remains up-to-date.